1) Beadboard provides a cottagy, casual feel. I've used it in a powder room. Beadboard has strips of wood with a rounded bead between each "board". You can get 4 foot by 8 foot panels of simulated beadboard (cheaper and easier), but true bead board comes in tongue and groove strips or boards. Cut each strip to the proper height and affix with trim nails. You may also add a touch of adhesive but if you ever remove the wainscoting, just be prepared to do some heavy patching or replacing the drywall. Then you add your baseboard on the bottom and a chair rail on top. Stain or prime and paint. A pretty easy weekend project.
2) Raised panels are more elegant than beadboard and evoke old world images. Whether you used painted wood, stained, or even cherry and mahogany, raised panels are gorgeous and luxurious. They can be a bit pricey. You can create a simulated look by taking flat trim pieces, making miter cuts (45 degree angle cuts), and affixing to your wall. Then add a chair rail. Paint all the trim and the wall the same glossy color to simulate faux panels.
For the real thing, take a look at these excellent step-by-step directions. This will be a long weekend project that will require very careful cutting, but you can certainly do it yourself. The results will certainly be worth it.